Austin Enterprises makes and sells three types of dress shirts. Management is trying to determine the most profitable mix. Sales prices
demand and use of manufacturing inputs follow:
The company faces two limits: (1) the volume of each type of shirt that it can sell (see maximum annual demand) and (2) 30200 direct
labor-hours per year caused by the plant layout.
Which of the three product lines makes the most profitable use of the constrained resource direct labor?
How much operating profit should your recommended product mix generate?
Suppose that the company could expand its labor capacity by running an extra shift that could provide up to 10200 more hours.
The direct labor cost would increase from $14 to $18 per hour for all hours of direct labor used. What additional product(s)
should Austin manufacture and what additional profit would be expected with the use of the added shift?